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The Potential for Greenhouse Tomato Production Expansion in Florida

Author

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  • Asci, Serhat
  • VanSickle, John J.
  • Cantliffe, Daniel J.

Abstract

The U.S. fresh winter tomato industry and Mexican tomato production have been engaged in a trade conflict since the early1970s. Given that tomato is the highest valued fresh vegetable item, the fresh tomato market in the U.S. is open for rent seeking actions of importers and domestic producers. While importers try to increase their shares by lowering the prices, domestic producers attempt to keep tomato as a high-valued item and at the same time avoid any costly investment in production practices (such as greenhouse production). However, the competition with Mexican greenhouse tomato producers push winter tomato producers (particularly, in Florida) to search for new investment opportunities. This paper utilizes net present value and real option analysis to investigate whether it is beneficial for Florida tomato producers to invest in greenhouse production methods to stay competitive in the tomato market during the winter season.

Suggested Citation

  • Asci, Serhat & VanSickle, John J. & Cantliffe, Daniel J., 2013. "The Potential for Greenhouse Tomato Production Expansion in Florida," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143095, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea13:143095
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    File URL: http://purl.umn.edu/143095
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    References listed on IDEAS

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    3. VanSickle, John J. & Evans, Edward A. & Emerson, Robert D., 2003. "U.S.-Canadian Tomato Wars: An Economist Tries to Make Sense Out of Recent Antidumping Suits," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 35(02), pages 283-296, August.
    4. Featherstone, Allen M. & Kastens, Terry L., 2000. "Non-Parametric and Semi-Parametric Techniques for Modeling and Simulating Correlated, Non-Normal Price and Yield Distributions: Applications to Risk Analysis in Kansas Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(02), pages 267-281, August.
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    7. Jeffery R. Williams & Richard V. Llewelyn & G. Art Barnaby, 1990. "Risk Analysis of Tillage Alternatives with Government Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 172-181.
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    9. Cook, Roberta L. & Calvin, Linda, 2005. "Greenhouse Tomatoes Change the Dynamics of the North American Fresh Tomato Industry," Economic Research Report 7244, United States Department of Agriculture, Economic Research Service.
    10. Uva, Wen-fei L. & Weiler, Thomas C. & Milligan, Robert A. & Albright, Louis D. & Haith, Douglas A., 2000. "Risk Analysis Of Adopting Zero Runoff Subirrigation Systems In Greenhouse Operations: A Monte Carlo Simulation Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), October.
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    Keywords

    Risk in investment decision; greenhouse tomato; net present value; real option approach; Agribusiness; Agricultural Finance; Crop Production/Industries; Production Economics;

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